The Central Bank of Iran said banks should allocate microloans only via their digital platforms from the beginning of the next fiscal year in late March.
Mehran Mahramian, the CBI deputy for innovative technologies, said, "Unlike other banking services, the infrastructure for microloans without referring to the bank is not fully developed. We have prioritized work on the credit rating system and it is expected to be ready before the year is out," Mahramian said, ISNA reported.
He referred to the bottlenecks borrowers face using electronic services. "At times getting a loan electronically is more difficult than approaching banks in person."
An efficient credit rating system will help expedite online lending to a great extent," he said.
According to Mahramian, the CBI is working to centralize the process of credit rating by creating a central database of the financial records of borrowers.
The CBI said earlier easing access to bank loans is in line with the policy to improve financial inclusion and enable people from all walks of life to benefit from bank resources, namely loans.
Last year, the CBI published rules for setting up credit rating firms that scrutinize the financial records of clients and report on the credibility of individuals and corporates by assigning scores on a scale of "very poor", "poor", "average", "good" or "very good".
Ratings are determined after assessing the financial performance of the customer within a fixed period plus solvency, ability and willingness to pay. Scores also indicate credibility and discipline in meeting debt obligations.
Aversion of Banks
The move was a part of the CBI’s measures to promote credit cards and small loans. While the demand for easy credit services is high in Iran, most banks are averse to the policy because of what they say is the infeasibility of such services compared to other [printable] activities.
The regulator said it is working on ways to expand financial inclusion, covering a range of banking services, from opening accounts to customer credibility assessment and electronic signature.
Banks gave an estimated 23,312 trillion rials ($66.02 billion) in loans in the first seven months of the current fiscal year – up 47.2% on the same period a year ago.
The CBI earlier said individual borrowers accounted for 7,468 trillion rials ($21.15 billion) or 32% of the loans while the big chunk ($44.8b) went to businesses.
Lending to individuals increased by 55% year-on-year and to companies it was up 43.8%.
The report reflected on bank performance vis-à-vis microloans, i.e. loans worth 2 billion rials or less. Banks processed 4,855 trillion rials ($13.7b) in microloans in the seven months to October 22 -- 39.4% higher on the same period last year.
Total loans above 2 billion rials per person jumped 87%. Observers say the growing demand for housing loans is one key factor driving the demand for loans.
Main Complaint
Unreasonable demand for paying loans, especially high collateral, is a key complaint of the vast majority of the people against banks, both private and state-owned.
The CBI earlier said that it supports the growth of BNPL services because of its positive impact on the economy.
It has been reported that nearly 15% of borrowers regret taking out bank loans while 64% of the users of innovative lending platforms were satisfied with the services.
BNPL is a type of short-term financing that allows consumers to make purchases and pay at a future date, often interest-free. Such credit schemes are often easier to get approval compared to traditional credit cards or other lines of credit.
About 4.5 million people in Iran have used innovative lending solutions, including BNPLs. Snapp Pay, DigiPay, WePod and AzKiPay are the major providers of BNPL services.
The annual report of Digikala, Iran's largest electronic retail platform, shows 5.5% of the purchases were made using BNBL in the last calendar year.
Snapp!, a major Iranian tech firm, said in its annual report that it made the BNPL service available to 4 million of its users last year.
The World Banks' Global Findex 2021 shows that 61% of Iranians had borrowed money and 25% had borrowed from formal financial institutions. The largest portion of borrowers had borrowed from friends and family -- 40% of the total population aged above 15.
It showed some 84% of Iranians had made digital payments and nearly 7% had a credit card in 2021, 2 percentage points less than in 2017. An estimated 83% owned debit cards.
WB data also showed that 48% of respondents had used mobile phone or internet bank to send or receive money.
Data shows that only 12% of Iranians use mobile money accounts, though two-thirds of this group used mobile money accounts at least twice in a month.
Some 31% used mobile phones to purchase goods online, and 33% used mobile phones or the internet to transfer money.
